The head of the World Trade Organisation has warned that Donald Trump's proposed tariffs on steel and aluminium risk triggering the first full-scale trade war since the 1930s, potentially plunging the global economy into recession.
Roberto Azevedo, the WTO's director general, said that recent announcements on trade policy had increased the risk of an escalation of trade barriers around the world. Speaking at a tense meeting in Geneva, he said: "An eye for an eye will leave us all blind and the world in deep recession." He urged members to make every effort to avoid "the fall of the first dominoes".
Mr Trump indicated he would not back down over his threat to impose a 25% tariff on steel imports and a 10% tariff on aluminium imports. He rejected the idea that the measures, announced as a way of defending America's national security, would lead to a trade war, despite threats of retaliation from the European Union, Canada, Brazil and China.
The US president hinted that Mexico and Canada could be exempted from the levies if they offered a better deal in renegotiations of the North American Free Trade Agreement. His position drew criticism from Republican speaker Paul Ryan, whose spokeswoman, AshLee Strong, said the White House should halt the plans. "We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," she said, noting that the new tax reform law had boosted the economy.
Andrew Kenningham, chief global economist at Capital Economics, said the flimsy national security justification increased the risk of retaliation. "The real worry is that this marks a turning point in US trade policy, away from bluster and brinkmanship towards actual protectionist measures," he said. "President Trump may discover that there are rarely any winners from trade wars."
